[K-Tech] Hyundai Motor's earnings drop sharply despite record sales, weighed down by US tariffs

Hyundai Motor autos await shipment at Pyeongtaek Port Gyeonggi Province Yonhap — Automobiles await shipment at Pyeongtaek Port, Gyeonggi Province. Yonhap

SEOUL, July 24 (AJP) - Hyundai Motor reported a double-digit drop in second-quarter operating profit on Thursday, as new U.S. tariffs and intensifying market competition eroded margins.

Operating profit fell 15.8 percent from a year earlier to 3.60 trillion won, or about $2.6 billion — the company’s sharpest quarterly decline since the third quarter of 2020.

The drop came even as revenue rose 7.3 percent to a record 48.29 trillion won, buoyed by strong sales of hybrid vehicles, solid performance in financial services, and favorable foreign exchange rates.

Net income reached 3.25 trillion won, while Hyundai’s operating margin slipped to 7.5 percent, down from 9.5 percent a year ago.

The company attributed the earnings decline primarily to the full brunt of recently imposed U.S. automotive tariffs, coupled with rising sales costs and increased use of incentives amid fierce competition in major markets.

Global vehicle sales edged up 0.8 percent during the quarter. Overseas deliveries increased 0.7 percent to 877,296 units, while sales in the United States rose 3.3 percent to 262,305 units, as buyers rushed to secure vehicles ahead of anticipated price hikes stemming from the tariffs. Hyundai has so far kept U.S. prices steady despite the duties.

Sales of eco-friendly vehicles — a category that includes hybrid, plug-in hybrid, and battery electric models — surged 36.4 percent year-on-year to 262,126 units globally.

Electric vehicle sales totaled 78,802 units, while hybrid sales hit 168,703, reflecting growing adoption in Europe and an expanded hybrid lineup.

Hyundai warned that trade-related uncertainty, particularly around U.S. tariff policy, remains the most significant risk to its outlook.

The automaker also faces additional pressure with federal tax credits for electric vehicle purchases in the United States set to expire on October 1, potentially dampening demand in the second half of the year.

Still, the company said it would maintain its annual earnings guidance for now. Hyundai added that it is preparing a “systematic response” ahead of the U.S. government’s expected announcement on tariff policy changes on Aug. 1.

Kim Dong-young davekim0807@ajupress.com